Expectations of wealth management clients are rising: now they crave a data-driven, personalized approach from financial advisors. According to a recent survey, 82% of investors <a href="https://go.factset.com/hubfs/PDFs/FactSet%20Digital%20Wealth%20Management%20Series_Part%20One%20-%20Making%20Digital%20Pay.pdf" rel="nofollow">expect</a> their advisors to incorporate an online component into the services they provide. 
Naturally, advisors can only meet these demands by adopting wealth management technologies. Financial firms have been pushing forward their digitalization efforts for a while now. The global wealth management software market <a href="https://www.grandviewresearch.com/industry-analysis/wealth-management-software-market" rel="nofollow">reached</a> a value of $4.27 billion in 2022 and, from 2023 to 2030, is estimated to grow at a compound annual rate of 13.9%.
<img loading="lazy" decoding="async" class="alignnone wp-image-12156 size-large" src="https://sombrainc.com/app/uploads/2023/03/How-Technologies-in-Wealth-Management-Increase-Value-for-Clients_1-2-1024x636.jpg" alt="The chart provides the global wealth management software market forecast from 2022 to 2030" width="1024" height="636" />
Source: Grand View Research
This article explains how introducing technologies in wealth management can increase the value of financial advisory services for clients. 
<h2>Enhanced personalization</h2>
The one-fits-all approach is a bad choice for wealth management clients as each of them has a unique background, portfolio, and asset goals. Traditionally, financial advisors categorize clients by wealth level to tailor services to their needs. But it doesn’t always work either, as clients of roughly the same net worth might pursue different purposes. 
How can wealth management technology help overcome this challenge? One of its possible uses is leveraging the power of artificial intelligence (AI). Advisors can use AI technologies to personalize investment recommendations and client engagement. 
For example, Morgan Stanley, a financial advisor company from New York, has created an AI-based <a href="https://www.forbes.com/sites/tomdavenport/2020/05/16/the-future-of-work-now-morgan-stanleys-financial-advisors-and-the-next-best-offer-system/?sh=e5c22f270276" rel="nofollow">Next Best Action (NBA) system</a>. NBA personalizes a wide range of client communication, from birthday greetings and stock market decline warnings to investment ideas. When a customer refuels their account, NBA can immediately start a conversation on how to better invest this money.
AI is also used to identify high-risk portfolios: portfolios with high-risk investments that can either deliver higher returns or throw your investment out the window.  Case in point: if an investor’s portfolio is marked as one with a high-risk investment, the system can alert the advisor once a market event — for example, a major company’s stock fall — happens. Advisors can then reach out to the client and give investment advice even before the client requests it. 
<img loading="lazy" decoding="async" class="alignnone wp-image-12157 size-large" src="https://sombrainc.com/app/uploads/2023/03/How-Technologies-in-Wealth-Management-Increase-Value-for-Clients_2-2-1024x636.jpg" alt="Image illustrates the quote that advisors can use AI technologies to personalize investment recommendations and client engagement" width="1024" height="636" />
Deloitte’s experts <a href="https://www2.deloitte.com/ca/en/pages/financial-services/articles/disrupting-wealth-management-hyper-personalization.html" rel="nofollow">believe</a> that personalization will soon become imperative for financial advisors who don’t want to lose their clients to lower-cost service providers. So, it’s a business-savvy decision to invest in AI-powered personalization now. 
<h2>Portfolio management </h2>
The expectations of today’s investors <a href="https://www2.deloitte.com/content/dam/Deloitte/de/Documents/financial-services/Wealth%20Management%20Digitalization.pdf" rel="nofollow">are shaped</a> by technological progress. Contacting advisors only to get an update on the investment portfolio status takes time and gives few data-driven insights. Being able to track their financial assets and review portfolio performance in real-time is what wealth management clients want these days. 
 
Financial advisors must incorporate portfolio management tools in their processes to meet this demand. Modern cloud-based software for wealth management can give clients access to their portfolio information anywhere and on any device. An online portfolio platform can serve as a hub where clients can access and modify any asset data to track progress without interacting with their advisor.
Financial advisors can also go the extra mile and use real-time analysis to automatically rebalance portfolios in response to market events (securing the client’s approval first). Automatic portfolio rebalancing takes away the headache of reviewing one’s portfolio regularly. The process becomes data-based and market-sensitive rather than emotional. 
<img loading="lazy" decoding="async" class="alignnone wp-image-12158 size-large" src="https://sombrainc.com/app/uploads/2023/03/How-Technologies-in-Wealth-Management-Increase-Value-for-Clients_3-2-1024x636.jpg" alt="The infographic explains advantages of cloud-based wealth management software" width="1024" height="636" />
<h2>Better security </h2>
Cybersecurity is one of the biggest concerns for any wealth management client. For example, in 2021, some companies <a href="https://www.ey.com/en_us/forensic-integrity-services/fraud-challenges-in-wealth-and-asset-management" rel="nofollow">experienced</a> a whopping 500% increase in annual fraud loss. Financial frauds remain at their peak today, so providing the highest level of security must be a priority for financial advisors.
How can wealth management technology solutions help? Modern software built with security in mind can create an extra layer of protection for sensitive financial information. For example, multi-factor authentication gives double protection to investors’ accounts by making it harder for cyber thieves to steal login credentials. Many <a href="https://www.morganstanley.com/what-we-do/wealth-management/online-security/authentication" rel="nofollow">advisory firms</a> have already implemented this type of authentication in their solutions.
Financial advisors can also embrace more sophisticated wealth management technologies to secure their clients’ data. For example, AI algorithms can identify abnormal transactions that can potentially be fraud and prompt the client and the advisor to double-check them. 
<h2>Data-driven investment decisions</h2>
Another recent advancement in wealth management technology that polishes the investors’ experience is robo-advisors. Relying on machine learning and big data, they make predictions and suggestions on the user’s investment options based on their area of interest, market events, and investment portfolio. Plus, many robo-advisors <a href="https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp" rel="nofollow">use</a> modern portfolio theory to offer investment suggestions with the highest return rates. 
Robo-advisers can also review investment options based on set criteria and investment strategies, predict risk levels, or even rebalance the portfolio. 
<img decoding="async" class="alignnone size-large wp-image-12159" src="https://sombrainc.com/app/uploads/2023/03/How-Technologies-in-Wealth-Management-Increase-Value-for-Clients_4-1-1024x636.jpg" alt="The infographic explains what robo-advisors do" />
While some stand-alone robo-advisor services claim to replace traditional wealth management soon, financial consulting firms can leverage this technology to bring extra value to their clients. Currently, hybrid robo-advice — when investment managers use digital tools to provide better service fast — is the most <a href="https://www2.deloitte.com/content/dam/Deloitte/de/Documents/financial-services/Deloitte-Robo-safe.pdf" rel="nofollow">common</a> and reasonable approach to using robo-advisors in wealth management.
<h2>Automated tax planning and reporting</h2>
Manual accounting is prone to human error. But even a small mistake in tax planning and compliance can cost clients dear. Using technology for tax planning lowers the risks of tax miscalculations and strengthens client trust. 
That said, automated tax planning and compliance through wealth management technology solutions not only assists advisors. It also improves the client experience. For example, wealth tech platforms can <a href="https://www.pwc.com/us/en/services/trust-solutions/private-company-services/business-perspectives/wealthtech-tax-planning-solutions.html" rel="nofollow">collect</a> data on taxable events — selling stock shares or getting interest payments — from various sources into one system. As a result, clients can access tax estimations at any moment and make informed decisions about their assets.
<h2>Conclusion</h2>
Modern technology brings transparency, security, and convenience to most industries. Wealth management companies cannot stand aside if they want to continue delivering high-quality services to their clients. Leveraging technologies in wealth management is a way to stay relevant and bring extra value to clients. Companies will become more competitive, and client loyalty will soar. 
For a wealth management company, embracing technology means deeper personalization, better portfolio management, higher security, data-driven investment advice, and error-free tax reporting and compliance. 
Digitizing your organization is not a challenge if you collaborate with a reliable partner who can consult you on the technology stack and complete the mission from A to Z. <a href="https://admin-prod.sombrainc.com:9443/fintech">Sombra</a> is an experienced fintech software development company that can help you increase the value of your services with software for wealth management. <a href="https://admin-prod.sombrainc.com:9443/get-in-touch">Get in touch</a> to discuss your project.

How Technologies in Wealth Management Increase Value for Clients

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